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Ruble Drops First Time in Three Days on Syria Strikes, Lower Oil

The ruble fell for the first time in three days, erasing earlier gains, as an oil rally faded and investors speculated Russian air strikes in Syria may escalate tension with the U.S. The currency of the world’s biggest energy exporter slid 0.2 percent to 65.4970 against the dollar as of 5:58 p.m. in Moscow, while the Micex Index of stocks fell 1.4 percent. Russia carried out four air strikes on Islamic State targets overnight, raising the risk of accidents between Russian and U.S. jets, who are sharing airspace as they bomb targets in Syria. Brent crude fell 0.2 percent, erasing a gain of as much as 3 percent that was driven by the latest oil production statistics from the U.S. and OPEC showing output contracting. At the "key" level of 65 per dollar, the ruble "is at a cross-roads," Tom Levinson, a foreign currency and rates strategist at Sberbank […]

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Schlumberger Deal With Russian Drilling Company Called Off

LONDON— Schlumberger Ltd. SLB -1.40 % on Wednesday backed out of a $1.7 billion deal for a stake in Russia’s largest onshore drilling firm after Moscow didn’t approve the deal by a deadline imposed by the Western oil-services giant. The collapse of the deal highlights the deteriorating relations between Russia and the West amid sanctions over Ukraine. It comes after Schlumberger warned last week that it wouldn’t extend the latest several deadlines for Russian antimonopoly officials to approve the offer. Schlumberger didn’t respond to messages seeking comment. Last week, Schlumberger said it would instead focus on other merger-and-acquisition opportunities. The transaction was proposed in January , accepted by EDC and originally expected to close by the end of March. Then it apparently got bogged down over concerns in Moscow that EDC’s activities could be affected by Western sanctions against Russia. Russia’s Federal Antimonopoly Service, which was reviewing the deal, […]

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Russia at ‘Last Frontier’ With Oil Tax as Kudrin Warns on Budget

The architect of Russian fiscal policy under President Vladimir Putin is having a hard time watching the system he created come undone. The budget is in a state of “shock” after officials failed to make timely decisions to temper spending and implement structural changes, especially on pensions, Alexei Kudrin, who was finance minister in 2000-2011, said in an interview in Moscow. That’s forcing the government to deplete its reserves even as outlays are falling fast, he said. “It’s difficult for me to see the reserves whittled away,” said Kudrin, who helped introduce the policy of amassing the stockpile in 2004 by funneling windfall revenue from oil and gas sales. “A buffer for the most critical situations must remain. The number of uncertainties and risks is too vast.” Russian budget policy is pushed to the limit as authorities grapple with a recession-hit economy crippled by a drop in oil prices, […]

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Sanctions, Oil Slump Delay Russian Offshore Drilling 2-3 Years

Russia’s state-run energy giants Rosneft OJSC and Gazprom PJSC are delaying some offshore drilling by two to three years because of sanctions and weaker oil prices, according to the country’s Ministry of Natural Resources. The nation will drill two offshore wells in 2017, down from an original plan for 14, Denis Khramov, deputy minister, said Tuesday at a conference in Russia’s Far East. The delay means 28 wells will be drilled in 2019 instead of 19, he said U.S. and European Union sanctions prompted by Russia’s role in the Ukraine crisis have cut access to offshore-drilling technology and equipment, Khramov said. Russia’s efforts to tap its offshore resources, which are estimated at 14 billion to 15 billion metric tons of oil equivalent, are lagging other countries, Khramov said. Russia drilled 11 subsea wells last year, compared with 57 in Norway, he said. The ministry this year approved drilling delays […]

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Gazprom Responds to EU Charges of Hindering Competition, Unfair Pricing

BRUSSELS—OAO Gazprom on Monday sent its response to European Union charges that the Russian energy firm hindered competition and charged unfair prices in Eastern Europe, arguing the case was “economically and legally unfounded.” The response, which was expected by Monday, “shows why we believe the European Commission’s allegations are based on an incorrect methodology,” Gazprom said. It comes a week after Gazprom said it proposed a settlement with EU regulators , a move that could help the company avoid billion-dollar fines. The European Commission, the bloc’s top antitrust authority, said it had received Gazprom’s response and would consider it “carefully…before taking any decision on how to proceed.” The regulator said it was assessing Gazprom’s settlement proposals “in parallel.” The commission in April filed formal charges against Gazprom , saying the state-controlled company broke EU antitrust law in eight countries where it is the dominant gas supplier—Bulgaria, Czech Republic, Estonia, […]

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Bearish Ruble Bets Increase as Currency Slides on Crude, Economy

The ruble weakened for the first time in three days as falling crude oil and concern about Russia’s contracting economy prompted hedge funds and other speculators to bet on currency declines for an 11th week. While the ruble has recovered from a record-low close a month ago, it’s still the worst performer among emerging markets this quarter after Brazil’s real with a drop of 16 percent. Natural-gas producers Gazprom PJSC and OAO Novatek pulled the benchmark equities gauge lower on speculation the government will increase taxes on the industry as it seeks to plug the widest budget deficit since 2010. Speculators were net short the ruble for the eleventh week, the longest bearish streak this year, U.S. Commodity Futures Trading Commission data showed on Sept. 25. They increased net ruble short positions to negative 2,543 futures in the week ended Sept. 22, the data, which are reported with a […]

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Russia Reconsiders Tax Proposals to Ease Oil Producer Fears

Russia will weigh lowering oil-export duties at a slower rate than planned instead of raising an extraction tax as the government seeks to plug its budget deficit without hurting the prospects for the country’s biggest crude producers. “The government is considering the variant where the export duty is reduced more slowly,” Natalya Timakova, a spokeswoman for Prime Minister Dmitry Medvedev, told reporters on Monday at his residence outside Moscow. Medvedev decided that Russia won’t make changes to an oil-extraction tax, she said. Finance Ministry plans to raise more than 600 billion rubles ($9.1 billion) of additional tax revenue next year prompted concerns that a higher extraction levy would curb Russian oil production. The collapse in crude prices sees Russia facing its widest budget gap this year since 2010, forcing the government to choose between deeper austerity, tax increases and a freeze on pension-fund contributions. The government had originally planned […]

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Bank of America Seeing Life Signs in Russia’s Foundering Economy

Bank of America Corp. is starting to see faint signs of an economic recovery in Russia. The magnitude of a slowdown in capital investment is easing, while corporate profits have been increasing, a combination that Vladimir Osakovskiy, the bank’s chief economist in Moscow, said could mark a turning point. The country’s recession may have bottomed when gross domestic product shrank 4.6 percent in the second quarter, and considering that company spending will probably drive the recovery, that stabilization is likely to be more important for the broader economy than persistent weakness in consumer demand, he wrote in a report last week. “Corporate profits in Russia are quite good year-to-date, and we look at robust growth in corporate profits as the main potential driver of stabilization and recovery in the near future,” Osakovskiy said by phone from Moscow last week. “We might see that the main macroeconomic indicators will start […]

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Kremlin Said to Urge Basel III Delay as Economic Crisis Deepens

Kremlin aides are urging Russia’s central bank to delay introducing tougher capital rules for lenders known as Basel III, arguing they may deepen the worst economic crisis in six years, three people familiar with the matter said. The requirements, due to take effect Jan. 1, may force banks to cut corporate lending, prolonging a recession that was triggered by plunging oil revenue and sanctions over Ukraine, one of the people said. Noncompliance will also hurt because lenders in breach won’t be allowed to pay dividends to shareholders, including the government, so a delay may help the budget, the person said. An Economy Ministry official proposed the Basel III delay at a meeting with Bank of Russia Governor Elvira Nabiullina and Prime Minister Dmitry Medvedev this month, one of the people said. Nabiullina, who’s tasked with safeguarding the entire financial system, rejected the initiative, according to the person. “The central […]

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Russian Oil Producers Head for Tax Showdown Amid Output Warnings

Oil workers pass a pumping unit near Almetyevsk, Russia. Photographer: Andrey Rudakov Russia’s oil industry begins a critical battle over taxes this week. Losing may result in the first decline in crude production at the world’s largest energy exporter since 2008. Oil producers are due to meet with Russian Prime Minister Dmitry Medvedev Monday to present their joint view on Finance Ministry proposals to increase crude oil extraction taxes, said two company representatives who asked not be be identified because the meeting isn’t public. The ministry wants to boost revenue by about 600 billion rubles ($9.1 billion) in 2016 alone to mitigate the biggest budget deficit in years. The price of crude plunged by about 50 percent over the past year because of a global oversupply. While Russia’s government finances have deteriorated, its oil companies have proved more resilient to the slump as some tax rates automatically adjusted lower […]

Posted On : Published By : Tom Whipple